Blog: Ideas and Living

The Net Neutrality hype has started up again. I find that many of my friends are propagating a lot of poorly-informed fear, uncertainty, and doubt about the changes. They compare it to cable offerings and packages with exclusives. They claim that throttling will make certain services unusable like HOT-lanes that you can only use based on the type of car that you buy.

It's easy to latch onto fear and to make great claims about censorship and access.

The Argument From Property Rights

There is a bitter irony involved with discussion of Net Neutrality.

These entities, Internet Service Providers, have made great investments into something. They developed it and found new ways to deliver it with greater speed and less cost year over year. And it has become so important they cannot be trusted to do as they please with it. By virtue of creating something valuable, ISPs like medical care providers, must submit to heavy government regulations under Title II.

People who are used to a conservative viewpoint will note that there is a violation of property rights occurring with Net Neutrality. The networks which comprise the internet are private, run on equipment owned by a non-public entity. Under a system of laissez-faire capitalism, the government shouldn't properly interfere with the way property is used unless it is used to violate someone else's life or property.

The Rational Counter-Argument: Telecom's History Of Government Entanglement

On the other hand, the powers that be in Internet and Mobile data services has always been subject to government franchises and licensing. They are not capitalist entities forged in a free market. The system that exists today didn't arise from natural selection given open competition. AT&T was forged into a monopoly by a comple of government-policies.

In 1918 the federal government nationalized the entire telecommunications industry, with national security as the stated intent.

One of the hardest things to do well is to grow a competitive environment after the government has worked to systematically destroy competition for a long time. So it's understandable to want to maintain government control since the entities which exist after deregulation are unnaturally large and wield large amounts of anti-competitive power.

It's also understandable that people who might be competitors would be wary of entering a field where they might face stifling resistance from government regulators with unclear limits on their powers.

Competition will ensure good practices, the free-marketeers argue, but we are prevented from strong competition by the history of the situation and innate resource limits so we have to regulate.

Net Neutrality and Title II are Not The Same Thing

I see the arguments on both sides. And I disagree with using Title II common carrier status for ISPs. Thus I am in favor of the current action by the FCC to roll back the 2015 changes.

I am a network engineer by trade and a proponent of individual-rights. So I can see the arguments of property rights AND the complexities of transitioning from government-enforced monopolies toward a free market.

I believe open competition is the best protection against corporate bad actors. And, thus, a low regulatory bar to allow for new competition should be pursued by government policy.

I am a proponent of Net Neutrality by voluntary agreement. This is something that should be decided in the IETF. Not by government edict. Yes, the internet is a medium that works best when anyone can access anything. But I don't trust a government given broad powers under an act of Congress created in 1934 to deregulate a monopoly that they created.

Net Neutrality Without Hysteria

I present to you a survey of articles I read this morning. Some of them are about preferential treatment of traffic. Others focus on privacy. It's a really complex field of issues and I encourage you to take it in without reacting right away.

Some of these are from 2014/2015. Others are more recent. And all will present a perspective that the more fearful among us are not sharing.

"Title II was included in the original Telecommunications Act of 1934 to address potential problems created by having one company, the “old” AT&T, being the monopoly provider of “telecommunications services” which atthe time and for much of the rest of the century meant services provided by the “public switched telephone network.”

Title II authorized the FCC to regulate the price of telephone services provided across state lines, or long-distance calls (while individual states regulated prices of “local” calls within states). Later, after the old AT&T was split up following years of antitrust litigation, and as some competition developed in telephone services, the FCC used Title II, as amended by the Telecommunications Act of 1996, to prohibit the pieces of the old AT&T (the regional “Bell Operating Companies” or “RBOCs”) from discriminating against companies wanting access to the network, while overseeing the systems that were developed for payment of traf c origination and termination."

"Following the guidance of Cellco, the court signaled it would tolerate a case-by-case regime that grants room for “individualized bargaining” by the parties to a paid priority arrangement. (Alas, the FCC rejected this approach in its 2015 Open Internet Order.)

Such deals, if done in a discriminatory manner, could be challenged ex post by third parties or by the FCC, but—and this is key—the burden of proof would fall on the challenger. In particular, the paid priority arrangement would be presumed not to violate the non-discrimination standard, and the challenger would have to overcome that presumption.

"By returning to light-touch regulation of broadband service, the Commission will give Muni ISPs incentives to invest in enhancing our networks and our deployment of innovative services at affordable prices while still ensuring consumers have unfettered access to the Internet," they wrote.

The substantive issues in net neutrality have to do with what services broadband internet providers are allowed to offer customers. There are legitimate concerns that these companies might give their own content fast-lane priority over rivals’ content, allow free delivery (also known as zero-rating, the practice of not counting certain types of content

toward data usage limits) only for favored content providers, and block consumers from accessing legitimate websites.But in many instances, fast lanes, zero-rating, and the like benefit customers. In separate research, both former FCC Chief Economist Michael Katz (with Ben Hermalin) and I (with Janice Hauge) showed that fast lanes benefit small content providers in their attempts to compete with established industry leaders. AEI scholar Roslyn Layton has shown that elderly and low-income consumers benefit from zero-rating services.

By adopting Title II regulations, the previous FCC outlawed all such activities.

This morning I started looking into Fairfax County ordinances on cable because I had a brilliant idea that examining regulatory text would make the basis for a rollicking, farcical article. I only got a few paragraphs in. ZZZZZzzzzzz… BORING!!! But… Enough to figure out that a Fairfax County cable franchise entails $5k application fee and $500k bonds. Ouch. And that doesn’t include the franchise fees themselves.

The idea was going to be that we don’t have enough competition for internet services because of the pay-to-play rules that local municipalities have put in place, and really that’s a fundamental problem that we should fix to save the internet. God that sounds dry even as I write about it in the meta. I lost interest after working at it for a bit. And instead I wrote this little ditty instead.

I noticed that Net Neutrality (or Net Neutering, as I like to call it) remains a topic that still easily grabs my attention. Why does it? Because I know enough to see the political exploitation going on. Yet again, the masses, to which group I usually belong, are proving to be easily hoodwinked and it upsets me to see it. There is a sick combination of the fact that most people are ignorant of how the internet is composed and, more specifically, how peering is done.

I say ‘ignorance’ here without judgment. I wouldn’t expect most people to know how the internet is composed. A well-run utility is understood by its users through the components of its public interface. Using the car as an analogy: You might understand what goes on under the hood of your car but you don’t need to in order to work the steering wheel, the pedals, and the gear selector.

I’d like for you to consider this question: if most people are ignorant of the details of the technology and composition of the Internet, by what stretch of the imagination are they fit to make decisions on regulation? I can’t fathom it. But that’s what’s so clever about the other main ingredient of the Net Neutering campaign. Whipping the public into a frenzy of fear so that they clamor for increased government power.

This is achieved by mass media messaging designed to induce dystopian fears of an internet where only the fast lanes will get you anywhere you care to be, and the hippie free-love internet will starve to death. The dystopian fear leads the unwary reader to conclude that something must be done to protect the Internet.

And the proposed solution is FCC regulation. Always more regulation… Worst of all is that the people flogging regulation operate on and promote the unquestioned assumption that a government regulatory body actually represents the consumer.

The so-called public interest is an indefinable notion since the only bona-fide common interests of all are defined in the lowest rungs of Maslow’s hierarchy of needs. Food, shelter… these things are best handled by the free market.

The consumer, as a class of people, is a non-concept. Everyone who earns money is a producer. Everyone who spends money is a consumer. Thus, we are ALL consumers and we are ALL producers.

The classes as defined are meaningless and regulation is, thus, arbitrary… lacking any real rational basis for constraint.

I will be repeating this a lot so you don’t need to read or remember this next line at all: There is no precondition for government corruption that is more powerful than arbitrary power.

More Cowbell

Well, for those who want an antidote against this sort of manipulation, I have a prescription: Don’t panic!

How? We can use the same methods that we use to make sure we buy low and sell high in the financial markets! (No… I’m not saying we need to use dollar-cost-averaging and rebalancing… :)

I would like to quote Jack Bogle, the founder of the Vanguard Group, on this one: “Don’t do something, stand there!!!”. His advice helps us to overcome a very common cognitive bias toward action. It recognizes that we, as humans, are bad at predicting outcomes. We are bad at guessing where the market will be in 6 months let alone a year.

Well… we are really, really bad at predicting direct and secondary effects of public policy. Don’t panic! Don’t be manipulated! And think your way through it long term.

Here’s my strong conviction for the most effective long term solution to protect the internet: get government out of the way of new competition instead of ceding it more arbitrary power.